TechWorks unveils strategy to boost UK semiconductor sector

The UK semiconductor industry has been spotlighted by TechWorks, which has revealed a comprehensive report outlining a strategic framework aimed at revitalising the sector.

Semiconductors, vital components in numerous technological domains like artificial intelligence, 5G telecommunications, and quantum computing, have far-reaching implications for national economies and global influence. Charles Sturman, the Chief Executive Officer of TechWorks, remarked, "Semiconductors are powering the innovations that address global challenges such as climate change, healthcare accessibility, and boosting productivity through digital transformation. These microchips represent a trillion-unit market, generating $630 billion in revenue globally in 2024, with projections reaching up to $1.9 trillion by 2034. Beyond their economic significance, semiconductors also underpin geopolitical power by shaping global supply chains and technology ecosystems."

The UK, despite its historical contributions to semiconductor innovation, has witnessed a decline in its market standing due to underinvestment and a lack of strategic focus. Although the UK boasts 160 chip design companies and 21 manufacturers employing 15,000 skilled individuals, it commands only 2% of the global market with an annual contribution of GBP £10 billion.

The TechWorks report, titled "Semi35 - A UK Strategy for Semiconductors" prepared by the Semiconductor Leadership Group, sets out a ten-year framework with five key pillars intended to boost the UK's standing in the global semiconductor industry.

The first pillar, "Grow Globally Competitive Chip Companies," focuses on cultivating a generation of fabless chip companies with a target of generating $100 billion in value over ten years, with aims to eventually reach $1 trillion. This strategy includes strengthening partnerships with global foundries and enhancing domestic production capabilities, particularly in silicon photonics and compound semiconductors.

The second pillar, "Scale-up for Manufacturing," aims to enhance UK production capabilities, especially in photonics, power electronics, and quantum technologies. This would involve introducing strategic funding mechanisms to enable capital expenditure on advanced production equipment, maintaining promising companies within the UK.

"Invest in Talent Development" constitutes the third pillar, which envisions building a talent pipeline through improved apprenticeships, university-industry collaboration, and promoting engineering as a prestigious career.

The fourth pillar proposes the creation of a "National Semiconductor Institute," drawing inspiration from Belgium's IMEC, to serve as a hub for research and development, innovation, design, and prototyping across emerging technologies.

The final pillar is "Enhance Domestic Demand," advocating for strengthened UK supply chains and encouraging the use of UK-designed chips within domestic markets, particularly through targeted government procurement initiatives in sectors like defence and telecommunications.

The report highlights significant challenges facing the UK, including stiff global competition from comprehensive semiconductor strategies in places like the US and the EU, which present substantial subsidies and could marginalise UK efforts. Additionally, there is a need to address the venture capital funding gap for later-stage investments, as many UK start-ups are acquired by US companies before scaling up.

Revising current policies to focus on targeted investments and adjusting the R&D tax credit framework are suggested as methods to steer resources towards high-potential sectors like semiconductors. Moreover, facilitating secondary equity sales could ease financial pressures on company founders and early-stage employees, promoting long-term engagement.

The report concludes with a call to action, encouraging decisive governmental support to position the UK as a semiconductor industry leader. By implementing the outlined strategic pillars, the UK could carve out a significant share of the USD $1.9 trillion semiconductor market, aligning with national goals of high-value job creation and bolstering national security.